2021 (8) TMI 764 - AT - Income Tax

Exemption u/s 11 - registration u/s 12AA(1)(b)(ii) denied - A.R. contended that all the details required by the CIT(E), could have been furnished before him provided the assessee has been granted sufficient opportunity of being heard by way of communicating to the appellant - HELD THAT - In view of principles of natural justice as above, we find it deem fit to restore the matter back to the file of the CIT(Exemption) to examine the issue of grant of registration u/s 12AA of the act, afresh, as per amended provisions of law, after taking into consideration the material evidence and after affording sufficient opportunity of being heard to the assessee trust. Accordingly, the case is restored to the CIT, for afresh consideration and examination of the application of assessee under section 12A(a).

Summary

Issues:
Grant of registration under section 12AA of the Income Tax Act.

Analysis:

1. Background: The appeal was against the rejection of the application for registration under section 12AA(1)(b)(ii) of the Income Tax Act by the CIT(E), Chandigarh. The rejection was based on the application being filed out of jurisdiction due to a search operation connected to a group case under section 132 and an order under section 127 of the Act.

2. Contentions: The assessee contended that the rejection was erroneous as the search operation was not disclosed to them, and no opportunity was given to explain. They argued that only a survey operation, not a search, had taken place, and no objection was raised regarding the society's activities and objectives, crucial for registration.

3. Legal Precedents: The assessee cited legal precedents emphasizing the importance of natural justice, such as giving an opportunity to be heard before transferring a case and disclosing reasons for such transfers. The principles of natural justice and the right to a fair hearing were highlighted as essential rights of the assessee.

4. Decision: The Tribunal found merit in the assessee's argument regarding inadequate opportunity and non-rebuttal of the jurisdiction issue. In light of the principles of natural justice, the matter was remanded to the CIT(Exemption) for a fresh examination of the registration application under section 12AA. Specific directions were given for the CIT to consider jurisdiction, assess evidence submitted, verify the society's objectives, and ensure the assessee's cooperation in the proceedings.

5. Conclusion: The appeal was treated as allowed for statistical purposes, and the case was restored to the CIT for a fresh consideration of the registration application under section 12AA. The Tribunal emphasized the importance of adhering to natural justice principles and providing adequate opportunities for the assessee to present their case effectively.